Fitch Ratings may cut some Adani Group bond ratings to speculative territory after billionaire founder Gautam Adani was charged by the U.S. Justice Department in a bribery scheme.
The U.S. rating company said in a release late Monday that it will monitor the U.S. investigations closely, the outcome of which could reflect significantly weaker corporate governance practices at the Indian conglomerate and prompt negative rating actions.
U.S. prosecutors announced an indictment Wednesday last week alleging that Gautam Adani, chairman of the Adani Group, met with Indian officials to advance an illicit deal and secure contracts worth billions of dollars for a renewable-energy company owned by the conglomerate.
Adani Group has denied the allegations, calling them “baseless.”
Adani Group said Monday that each of its portfolio companies has sufficient liquidity to cover all debt-servicing requirements for at least the next year.
Fitch said that it will monitor the investigations for developments affecting the financial flexibility of the rated entities, particularly any material deterioration in near- to medium-term funding access.
Fitch placed the BBB- rating on Adani Ports & Special Economic Zone’s U.S. dollar senior unsecured bonds on watch for a possible downgrade. The BBB- rating is the lowest investment grade.
The ratings firm also placed Adani Energy Solutions’ long-term foreign- and local-currency issuer default ratings of BBB- on watch for a possible downgrade.
Fitch cut the outlook for BBB- ratings on certain U.S. dollar secured bonds issued by Adani Green Energy to negative from stable.
The move comes after S&P Global Ratings last week took various ratings actions on five Adani Group entities.
S&P said U.S. prosecutors’ indictment of senior Adani Group leadership could affect investor confidence in other Adani entities as the founder is on the board of multiple group entities, potentially impairing funding access and increasing funding costs.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
